A plaque at the Taiwanese representative office in Lithuania. China has downgraded its ties with Vilnius over the opening of the office. AP
Lithuania allowing Taipei to open an office using the name Taiwan was a significant diplomatic departure that defied a pressure campaign by Beijing.
China baulks at any official use of the word "Taiwan", lest it lend a sense of international legitimacy to the island -- which it considers a part of its territory to be taken one day.
"The Chinese government had to lower diplomatic relations between the two countries... to safeguard its sovereignty and the basic norms of international relations," the ministry said in a statement announcing the downgrade to the charge d'affaires level.
"The Lithuanian government must bear all consequences that arise from this."
It added that Lithuania had "abandoned the political commitment made upon the establishment of diplomatic relations" with China.
It was a reference to the "One China" policy, under which countries officially recognise Beijing over Taipei.
Lithuania's foreign ministry on Sunday said it "regrets" China's decision to downgrade ties.
"Lithuania reaffirms its adherence to the 'One China' policy, but at the same time has the right to expand cooperation with Taiwan," the ministry said in a statement.
Taiwan announced in July that it would open the office, its first new diplomatic outpost in Europe in 18 years.
That prompted a fierce rebuke from China. It withdrew its ambassador from Lithuania and demanded Vilnius do the same, which it eventually did.
China also halted freight trains to Lithuania and stopped issuing food export permits.
Pressure on Taiwan
The opening of the Vilnius office is the latest sign that some Baltic and central European countries are seeking closer relations with Taiwan, even if that angers China.
In May, Lithuania announced it was quitting China's 17+1 cooperation forum with central and eastern European states, calling it "divisive".
Politicians in the Czech Republic have also pushed for closer ties with Taiwan.
Only 15 countries officially recognise Taipei over Beijing.
But Taiwan maintains embassy equivalent representative offices with many nations and several countries have similar arrangements in Taipei.
International support for the island has grown since China's President Xi Jinping came to power.
A growing number of unofficial diplomatic visits have taken place between Taiwanese, European and American officials in recent months.
Xi has ushered in a more authoritarian and muscular era, taking a markedly more aggressive approach to Taipei since the 2016 election of President Tsai Ing-wen.
She is loathed by Beijing because she regards Taiwan as an already sovereign nation and not part of "one China".
Beijing has also poached several of Taiwan's diplomatic allies in recent years, including Panama, El Salvador and the Dominican Republic.